Growing in the Basin 

Uncertain water year forces producers’ hands 

By SARA HOTTMAN

H&N Staff Reporter

October 28, 2010

   “It was a hard decision,” Kandra said. “It was only the second time in my life I hadn’t spent part of my fall sitting on a combine.”

   When he made the decision in April, the price of soft white wheat was around $115 a ton. But by the time harvest rolled around, prices were up to $250 a ton.

   Fires that swept through Russia this summer destroyed crops and diminished the worldwide wheat supply, but the demand remained.

   Grain and wheat prices skyrocketed.

   Agriculture is a price taker.     

   Producers don’t set their prices. The buyers who bid on grains, vegetables or beef on the open market do, and those bids are subject to basic supply and demand principles: producers will be in the black, or at least break even, if demand exceeds supply.

   If the opposite occurs, they fall into the red.

   Producers also face other variables — water, weather, policy, trends —   that all decide how much they will make selling their product. In Southern Oregon and Northern California, where agriculture contributes $1 billion to the economy annually, falling into the red can have a far-reaching impact.  

   “(In bad years), farmers and ranchers adjust their expenses. They buy less labor, buy less fertilizer, tires, parts,” said Willie Riggs, director of the OSU Klamath County extension office. “But they also buy less fast food, movies. … When you have less money to spend, you’re not going to be able to spend in those other sectors.

   “There are two things you measure in the economy: net income … and the impact on the community as a whole,” Riggs said. “If I’m spending less money because I made less money, who am I not spending it with?”

   The Klamath Basin economy revolves primarily around wood products and agriculture.  

   Agricultural sales

   Klamath County agricultural sales are 57 percent livestock and 43 percent food and grain crops. Livestock in the county was valued at $139 million in 2009 and crops were valued at $241 million, according to the OSU Extension Economic Information Off ice. In good years, crops and livestock generate $300 million — the industry’s direct impact.

   But money cycles through a local economy. Riggs estimates agriculture’s indirect contribution to the economy is $600 million.  

   This year’s effect

   This year, Basin farmers and ranchers couldn’t get a break.

   A cold, wet spring delayed planting. Drought conditions in the summer impeded water deliveries to irrigators, which diminished yields. Harvests were delayed by more cold and wet weather in the fall.

   A bad economy means there is less demand for their products.

   Producers’ business woes have already hurt the seed, fertilizer and equipment vendors who serve them, and will inevitably impact service, retail, entertainment, government and other sectors of the economy, setting the stage for a rough period leading up to the next growing season, Riggs said.

   “When you lose a dollar in agriculture, you lose 90 cents in all remaining (industries),” Riggs said. “Likewise, if we generated an additional dollar, we could expect to see an additional 90 cents in the rest of the economy.”